Strategy Growth and priorities for 2020 · Strategy Growth and priorities for 2020 Peder Holk...

Strategy Growth and priorities for 2020

Peder Holk Nielsen, CEO, Novozymes

Benny D. Loft, CFO, Novozymes

This presentation and its related comments contain forward-looking statements, including statements about future events,

future financial performance, plans, strategies and expectations. Forward-looking statements are associated with words

such as, but not limited to, "believe," "anticipate," "expect," "estimate," "intend," "plan," "project," "could," "may," "might"

and other words of similar meaning.

Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results

to differ materially from expectations, both positively and negatively. The risks and uncertainties may, among other things,

include unexpected developments in i) the ability to develop and market new products; ii) the demand for Novozymes’

products, market-driven price decreases, industry consolidation, and launches of competing products or disruptive

technologies in Novozymes’ core areas; iii) the ability to protect and enforce the company’s intellectual property rights; iv)

significant litigation or breaches of contract; v) the materialization of the company’s growth platforms, notably the

opportunity for marketing biomass conversion technologies or the development of microbial solutions for broad-acre crops;

vi) the political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) the global

economic and capital market conditions, including, but not limited to, currency exchange rates (USD/DKK and EUR/DKK in

particular, but not exclusively), interest rates and inflation; viii) significant price decreases on input and materials that

compete with Novozymes’ biological solutions. The company undertakes no obligation to update any forward-looking

statements as a result of future developments or new information.

Forward-Looking Statements

2

Welcome to our Capital Market Days

Tuesday, May 5

12:30–13:15 Plenum presentation: Strategy

– Growth & priorities for 2020

13:15–13:45 Plenum presentation: Sustainability

– Leading the way

14:00–14:45

Plenum presentation: Innovation

– Competitive advantages in a changing

environment

15:00–15:50

Break-out

sessions

(rotation)

Track 1: Household Care

Innovation & emerging markets

Partner guest:

16:00–16:50

Track 2: Bioenergy

Advancing grain-based ethanol

Partner guest:

17:00–17:50

Track 3: Food & Beverages

Food for a growing world

Partner guest:

Strategy – Sustainability – Innovation – Household Care – Bioenergy – Food & Beverages

3

Wednesday, May 6

08:30–08:50 Plenum presentation: Business development

– Platforms for the future

09:00–09:50

Break-out

sessions

(rotation)

Track 1: BioAgriculture

Technology, accomplishments

and priorities

Partner guest:

10:00–10:50

Track 2: Biomass conversion

On the cusp of commercialization

Partner guest:

11:00–11:50

Track 3: Animal Health &

Nutrition

An alliance for growth

Partner guest:

Session outline

• Perspectives on development

• Current position

• Strategic direction

• Long-term targets and financial priorities, CFO Benny D. Loft

4

15 years of innovation-driven returns

Strong absolute returns since 2000

2.5x sales

4x EBIT

5x net profit

DKK ~30bn In operating cash flows

Driven by topline and leverage

~7% organic sales CAGR

+5.4 %-points gross margin

+10.5 %-points EBIT margin

+12.9 %-points ROIC

Innovation is the recipe

DKK 16bn invested in R&D

+100 new solutions marketed


5

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

30%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Sales DKKm EBIT margin R&D/Sales ROIC

Novozymes has consistently outperformed global GDP – through volatile oil price cycles


6

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Organic growth has outperformed global GDP by ~4 %-points on avg.

NZ org. sales growth Global GDP growth (WB/IMF)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

20

40

60

80

100

120

140

DK

K m

illio

n

US

D/b

bl

Novozymes’ quarterly sales in DKK and oil prices

WTI Q avg. Revenue

Diversification through market-expanding innovation has been key to our consistency

Diversity in end markets:

Bioenergy, Agriculture & Feed have

emerged

Lower top 5 customer concentration:

Strong growth in new areas has

decreased dependency on Household

Care

Geographically, we have succeeded in

growing all regions


7

0%

20%

40%

60%

80%

100%

2000 2014

Sales by segment

Technical & Pharma

Agriculture & Feed

Bioenergy

Food & Beverages

Household Care

37%31% 0

2

4

6

8

10

12

14

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

DK

K b

illio

n

LATAM

AP

NA

EMEA

2000 Sales by geographical split 2014

More than 100 new “public” molecules and technologies launched across markets


8

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Household Care

Food & Beverages

Bioenergy

Agriculture & Feed

Technical & Pharma

Total launches 8 6 9 7 8 10 8 9 8 6 6 11 8 2

= Product launch

Investing for long-term growth; People, CAPEX and M&A


9

DKK ~11bn in CAPEX 2000-2014

2000-04

2005-09

2010-14

LATAM

EMEA NA

APAC

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2000 2014

2x employees – from 3,208 FTE to 6,454 FTE

Latin America

Asia Pacific

North America

Denmark (incl. EMEA)

>1.5bn DKK

> 500m DKK

>100m DKK

<100m DKK

BioAg

Enzymes

Biopharma

Biologicals

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Earth Bioscience

Philom Bios Turfal

EMD

CropBioscience

Natural

Industries

TJ

Technologies

BioAg Alliance with

Monsanto

Biocon Enzymes

BioGaia Delta GroPep Divestment Biopharma (Lund)

Iogen

Enzymes

Divestment Roots Octen Gamlen

BETA

Renewables

DKK ~5bn spent on acquisitions

Sybron Jefferies Semco Roots

Our set of competitive advantages across the value chain has led to a unique market-leading position

Scale

• Production: 5 core

plants in 3 regions

• Research &

Development: 2/3

of total investment

of industry

• Technical

services: half of

commercial

organization “on

site”

• Market &

technology

coverage

Quality

• Superior logistical

agility due to full

control of value

chain

• Right quality for

customers and

regulatory

requirements

Sustainability

• Triple bottom line

• Trusted long-term

partner

• Pioneering life

cycle assessment

documentation

High barriers

• More than 7,000

patents

• Diverse biotech

know how and

investments

needed to

compete

• Customer

partnerships

• Manufacturing

expertise


10

Novozymes

48%

Genencor (DuPont)

20%

DSM 6%

Others and

captive 26%

Novozymes

48%

Genencor (DuPont)

20%

DSM 6%

Others and

captive 26%

48%

20%

6%

26%

Source: Novozymes estimate

Novozymes

Dupont

DSM

Others


11

New purpose is instrument for long-term impact


12

Spark; Passion;

Openness; Science

The Novozymes’ Touch

Ambition: Change

the world together

with our customers

10 in 10

Vision: “We imagine

a future where our

biological solutions

….”

Vision: "We imagine

a future where our


….”

Touch the World values

Dare to lead;

Trust and earn trust;

Connect to create,

Unlock Passion

Touch the World values

Dare to lead;

Trust and earn trust;

Connect to create,

Unlock Passion

Who are we? (2000−2007)

What’s our role in the world? (2007−2015)

How do we create

the biggest impact? (2015−)

Our new strategy puts partnerships front and center for success in creating impact


13

Working in partnerships is embedded in how we do business. But we can do better and more!


14

Novozymes has a strong

track record of

partnerships New solutions

Unquestionable focus, longevity,

reliability, scale and history of

partner collaboration makes

Novozymes an ideal partner

Working hand-

in-hand with

partners is in

our DNA

We enable partners to bring

new, better or lower-cost

products to market

Partner benefits

Cost reduction

Sustainability

Our solutions reduce costs by

saving raw materials, energy,

water and chemicals

We enable partners to market

sustainability claims and reach

own sustainability goals

Long-term financial targets reflect starting point and priorities

2020 financial targets:

Top-line growth is seen as best means for ensuring long-term sustainable earnings growth

We want to maintain high profitability and deliver strong returns on capital

2020 impact targets:

Let’s create the impact the world needs

…and put pressure on ourselves to act with speed


15

8-10%

organic sales growth

on average

≥26% EBIT margin

≥25% ROIC incl. goodwill

REACH

6 billion people with our


EDUCATE

1 million people about the

potential of biology

CATALYZE 5 global partnerships for

change

DELIVER

10 transformative

innovations

SAVE 100 million tons of CO2

ENABLE Novozymes' employees to develop

Growth until 2020 expected to be driven by established industries with additional growth from platforms

~7% Novozymes’ organic growth average, 2010-2014

~7% Growth platforms’ organic growth average, 2010-2014

~7% Established industries’ organic growth average, 2010-2014


16

2010 2011 2012 2013 2014

Long-term

organic growth target

8-10%

Established industries are

the basis for growth

Growth platforms expected to

enable 8-10% growth

Diversification in revenue

streams important for solidity

2015 2016 2017 2018 2019 2020

1

2

3 Growth platforms

- BioAg

- Biomass Conversion

- Animal Health & Nutrition

- Pharma

Established industries

- Household Care

- Grain-based ethanol

- Food & Beverages

- Technical

What are the opportunities for further leverage?

Gross margin Technology development supports future productivity improvements, but many unknowns, such as input costs and competition

S&D costs A potential area for increased investments, depending on go-to-market models

R&D costs Expected to fluctuate around 14% of sales

Admin. Costs Expected to marginally decrease as function of growth

EBIT margin We target an EBIT margin ≥26%


17

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Gross margin

S&D costs

R&D costs

Adm. costs

EBIT margin

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

-500

0

500

1,000

1,500

2,000

2,500

Net-Interest-Bearing-Debt/EBITDA NIBD DKKm

NIBD/EBITDA

Financial priorities; - Innovation, growth & shareholders

ROIC expected at ≥ 25%:

• Growth in net profit

• Deferred income from

The BioAg Alliance decreasing

• Less growth in invested capital

NIBD/EBITDA target: 0‒1


18

2015 to 2020: Organic

sales growth

R&D

8-10% ~14% ~8% 40% 2bn + CAPEX Dividend

payout ratio

2015 buyback

Initiatives & returns

Conclusion

• Strong competitive position built on heritage and compounded investments in technology and assets

• We have a long term view on investments - with partners, in R&D, in people and in facilities

• Strategic direction reflects priority of growth and to make an impact on the world in partnership!

• And remaining a highly profitable company along the way


19

Strategy Growth and priorities for 2020 · Strategy Growth and priorities for 2020 Peder Holk...

Documents

Transcript of Strategy Growth and priorities for 2020 · Strategy Growth and priorities for 2020 Peder Holk...